#Ethanol Officially Breaks Through the Blend Wall

Cindy Zimmerman

car-wallThe latest numbers from the Energy Information Administration (EIA) show that ethanol officially broke through the blend wall in 2016.

The latest data shows U.S. ethanol production set a new record of 15.33 billion gallons (bg) last year and the average gallon of gasoline contained slightly more than 10 percent ethanol, according to the Renewable Fuels Association (RFA).

“Driven by the Renewable Fuel Standard and attractive blending economics, domestic refiners and blenders used more ethanol than ever before,” said RFA president and CEO Bob Dinneen. “In the end, 2016 will forever be remembered as the year we left the fictional ‘blend wall’ in the dust once and for all.”

Total ethanol production in 2016 was up 3.5% from the previous high of 14.81 billion gallons in 2015. The data also suggest domestic ethanol disappearance of 14.4 billion gallons in 2016 (14.06 bg of input by blenders/refiners and 340 mg of “supply adjustments”), along with exports of 1.05 bg. U.S. gasoline consumption totaled 143.37 bg, up 1.9% from 2015 and a new all-time record. The data imply an average ethanol blend rate across the U.S. of 10.04%, meaning higher level blends like E15 and E85 saw increased market penetration.

EIA also reported that a new monthly production record was established in December, with output averaging 1.047 million barrels per day.

Ethanol, Ethanol News, RFA

The Global Trends Driving #Ethanol Demand

Lizzy Schultz

Ethanol exports continue to serve as a valuable and expanding revenue source for the U.S. ethanol industry. As part of a presentation during last week’s National Ethanol Conference, Scott Richman, Senior Vice President, Informa Economics, provided an in-depth look at current market trends associated with global trade in ethanol and key factors that are driving ethanol demand.

“While the domestic market is still the dominant market for ethanol sales, it’s no longer enough,” said Richman during his presentation. “In recent months we’ve been producing at a rate of 16 billion gallons per year, so clearly export markets are vital for the future health of the U.S. ethanol industry.”

Last year was the second largest year for U.S. ethanol exports, with a total reaching just over one billion gallons. Richman praised the collaborative work being done on the ground by the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC) to help create global demand for ethanol in several emerging markets.

“At least two thirds of our ethanol exports are going to countries with ethanol mandates,” he said. “The policies that those countries have, and the work of the partnership between the RFA and USGC are critically important, and will remain critically important, on that front.”

Richman also explained how low U.S. corn prices, global interest in lowering carbon emissions, increased global demand for high octane fuels, and recent industry challenges faced by the Brazilian ethanol market have all helped position U.S. ethanol competitively on the global market.

The importance of U.S. trade policy, as well as the political climate of countries that serve as key ethanol export markets, to the future success of U.S. ethanol exports was also discussed.

Catch the full presentation here:
#RFANEC Presentation-Scott Richman, Informa Economics

2017 National Ethanol Conference Photo Album

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RFA Talking #Ethanol Regs with Trump Adviser

Cindy Zimmerman

Renewable Fuels Association (RFA) president and CEO Bob Dinneen says he has been talking with a special regulatory adviser to President Trump about how they might work together on regulatory changes to the Renewable Fuel Standard (RFS), but it involves compromising on the point of obligation issue.

Dinneen issued a statement regarding a call he received from “an official with the Trump administration” – identified by others as Carl Icahn, who owns CVR Refining. Dinneen says he was informed that “a pending executive order would change the point of obligation from refiners to position holders at the terminal, a potentially small increase in the number of obligated parties, but one which would distribute the obligation more equitably.”

“Despite our continued opposition to the move, we were told the executive order was not negotiable,” said Dinneen. RFA just submitted comments last week opposing the proposed change in point of obligation from refiners to blenders, while one of RFA’s largest members, Valero Energy, supports it – as does CVR Refining.

Dinneen indicated he would rather relent on the point of obligation to get a waiver allowing higher ethanol blends to be sold year round. “Our top priority this year is to ensure consumers have year-round access to E15 (15% ethanol) and we would like to Trump administration to help cut through the red tape on this unnecessary regulation,” he said. “We will continue to do everything we can to ensure consumers have access to the lowest cost, cleanest, highest octane source of fuel in the world, and to ensure a strong RFS is maintained.”

Press reports indicate this was the deal that was struck between RFA and Ichan, which was denounced by ethanol trade group Growth Energy. “Neither RFA nor Carl Icahn have the authority to strike a ‘deal.’ Mr. Icahn does not work for the U.S. government; he owns CVR Refining, which would profit directly from this change,” said Emily Skor, CEO of Growth Energy.

American Coalition for Ethanol Executive Vice President Brian Jennings also commented. “Despite rumors, this is not a done deal and not a take-it-or-leave-it scenario. Changing the RFS point of obligation and providing RVP relief will both require EPA rulemaking and public comments,” said Jennings. “The only clear winners in a deal to move the RFS point of obligation would be Carl Icahn and oil refiners like Valero.”

Ethanol, Ethanol News, Government, RFA, RFS

How #Ethanol and Oil Can Work Together

Lizzy Schultz

One of the highlights of last week’s National Ethanol Conference was the Future of Fuels Policy Panel. One of the panelists was Chet Thompson, American Fuel and Petrochemical Manufacturers (AFPM) President and CEO. AFPM represents the refining and petrochemical sectors of the fuel industry, and Thompson spoke during the panel about ways that the ethanol and oil industries can work together towards the common goal of improving America’s energy industry.

“One of the reasons we came today is not to focus on our differences, and as you know we’ve had our fair share of differences about the Renewable Fuel Standard (RFS) Program and the policy behind it, but we came to talk about ways that we could work together going forward with our industries,” said Thompson in an interview following the panel.

Thompson also discussed how the Trump Administration’s stance on energy seems to be a win for both the oil and ethanol industries.

“It’s refreshing to have a pro-energy President who doesn’t view us as the enemy and sees us as an asset,” he said. “We’re optimistic about some of his Executive Orders on regulatory reform and infrastructure to push along the Dakota Access Pipeline (DAPL) and the Keystone Pipeline.”

AFPM supports the movement of the Point of Obligation, but Thompson noted that their support of the movement is not an anti-ethanol stance.

“Certainly the Renewable Fuels Association’s (RFA) perspective on the success of the RFS Program is different than ours, but I think we can all agree that it’s in need of some fixes and we’re here to explore what we can agree on in terms of ways to fix the program,” he said. “In the meantime, we believe there are things the agency can do to make the program more equitable in the short term, and that means moving the Point of Obligation.”

Learn more in Chuck’s full interview with Chet here:
Interview with Chet Thompson, AFPM

National Ethanol Conference photo album

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#Ethanol Helps Fuel Minnesota Economy

Cindy Zimmerman

The ethanol industry contributed $1.98 billion to Minnesota’s economy last year, according to a new study released by ABF Economics and commissioned by the Minnesota Bio-Fuels Association.

This in turn generated $6.67 billion in gross sales for Minnesota businesses and supported nearly 18,000 jobs in 2016.

“Minnesota’s ethanol industry remains a significant contributor to the state’s economy and supports thousands of jobs in both rural and urban parts of the state,” said Tim Rudnicki, executive director of the Minnesota Bio-Fuels Association.

ABF Economics said Minnesota’s ethanol industry generated nearly $1.5 billion in household income and paid $80 million to state and local taxes in 2016.

The study also found the ethanol industry used 410 million bushels of corn, or 26 percent of Minnesota’s 2016 corn crop, to produce 1.18 billion gallons of ethanol, 3.5 million tons of dried distiller’s grains (DDGs) and 244 million pounds of corn oil.
Read more.

Ethanol, Ethanol News

Media Viewpoints at #RFANEC

Cindy Zimmerman

A year ago at the National Ethanol Conference, Rachel Gantz wore a media ribbon on her nametag. This year, the “hack turned flack” (as she describes herself on Twitter) is communications director for the Renewable Fuels Association and she sat down with a few of her media colleagues to talk about how the ethanol industry can do a better job getting its message out.

Gantz was joined by DTN/The Progressive Farmer staff reporter Todd Neeley; Wall Street Journal reporter Amy Harder; and Jerry Hagstrom, The Hagstrom Report. Listen to their conversation here: #RFANEC media panel

National Ethanol Conference photo album

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Novozymes Helps #Ethanol Producers Listen to Data

Cindy Zimmerman

Listening to your ethanol plant can save you money, according to Novozymes technical service manager Laurie Duval, who presented a NEC Tech Connect session at the National Ethanol Conference last week.

“Basically ethanol plants are huge machines that are producing tons of data every day,” said Duval. “The opportunity in the ethanol industry is around making better use of that information to generate more profitability.”

Duval says getting to the bottom of that data could increase yields as much as two percent “which is worth millions of dollars to an ethanol plant, just by listening to that data.”

Duval explains how Novozymes helps producers understand data management and customize tools for their facilities. Interview with Laurie Duval, Novozymes

National Ethanol Conference photo album

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Ethanol Export Opportunities in Sight at #RFANEC

Cindy Zimmerman

Ethanol export panel included Ed Hubbard, RFA; Ryan LeGrand, USGC; Amit Sachdev, USGC; Eric Olson, U.S. Commerce Dept.; and Josh Pedrick, Ethanol Reporter, S&P Global Platts

For the second year in a row, the Renewable Fuels Association (RFA) joined with the U.S. Department of Commerce’s International Trade Administration to host an International Buyer Program (IBP) at the National Ethanol Conference.

The program, designed to introduce U.S. ethanol sellers to foreign buyers in an effort to expand U.S. exports, included 18 international companies from seven top ethanol export markets: China, South Korea, Peru, Mexico, Colombia, India and Brazil.

As part of the IBP, the NEC featured a panel of experts who discussed the top global ethanol markets and export opportunities that exist now and in the future. RFA General Counsel Ed Hubbard moderated the panel which included insights from Ryan LeGrand, Mexico Director, U.S. Grains Council; Amit Sachdev, Country Representative/Consultant, U.S. Grains Council; Eric Olson, Commercial Officer & Senior International Trade Specialist, U.S. Commercial Service; and Josh Pedrick, Ethanol Reporter, S&P Global Platts.

Listen to their discussion to learn about future opportunities for ethanol exports: #RFANEC Ethanol Export opportunities panel

National Ethanol Conference photo album

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Groups Oppose RFS Point of Obligation Change

Cindy Zimmerman

U.S. biofuel and agricultural organizations wrote to EPA Administrator Scott Pruitt last week opposing any change to the Renewable Fuel Standard (RFS) point of obligation.

“The point of obligation is one of the most important remaining tools to help drive higher blends remaining in the RFS. It creates economic incentives for gasoline retailers to offer higher blends such as E15 by providing an economic incentive for increased biofuels blending. Shifting the point of obligation as urged by its proponents would eliminate this incentive. In addition, the proposed effort to shift the obligation would increase by almost 800 percent the number of entities required to comply with the RFS, creating a new and less efficient market,” said the groups in the letter.

The groups also urged Pruitt to take swift action to provide regulatory relief by lifting the Reid vapor pressure (RVP) restriction on E15. The letter was signed by the Advanced Biofuels Business Council, American Coalition for Ethanol, Growth Energy, and the National Farmers Union.

Read more.

ACE, EPA, Ethanol, Ethanol News

Terry Brandstad Addresses Ag Outlook Forum

Lizzy Schultz

The distinguished speaker at this year’s USDA Agricultural Outlook Forum was former Iowa Governor Terry Branstad, who was recently nominated as ambassador to China.

Branstad took time during his speech to praise incoming Secretary of Agriculture Sonny Perdue and share his thoughts on the future of agriculture and economic development in rural America.

“Simply put, American agriculture is tied to rural America, and rural America is tied to greater agricultural economic development. Perhaps on of the most underreported national news stories of the past few years has been the economic recession that has hit the agricultural economy and the jobs it has cost in farm machinery manufacturing as well as the losses that farmers have sustained.”

Branstad touched on the projected decrease in farm income and how the current farming economy has created financial pressures that are negatively impacting several different industries that are essential to the economies of rural America.

“Despite recent challenges, I believe there is a bright future for agriculture and economic growth in rural America. I’m hopeful because American agriculture is poised to continue innovation, and I believe American agriculture remains best positioned to help feed and fuel this growing global population and deliver the growing fiber and protein requirements demanded by growing middle class populations around the world,” he said. “I’m encouraged by the renewed interest in agriculture and the talent pipeline that is flowing into American agriculture today. I’m confident that the Trump-Pence administration will support the advancement of innovation in agriculture.”

Listen to his full address here:
Terry Branstad Addressing Agricultural Outlook Forum

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